Watching A Train Wreck In Slow Motion
A report from the Virginian Pilot. “Two years ago Maurice Watkins’ budding career as a real estate agent seemed off to a good start. Listings sold quickly, and buyers were aplenty. Now, the 28-year-old Norfolk resident spends hours each day in his apartment trolling career Web sites in search of a job. Watkins is among nearly 900 Hampton Roads real estate agents who called it quits last year amid the most sluggish housing market in more than a decade. ‘At the end of 2007, you saw a real drastic change,’ he said. ‘The market transformed. My client base was dwindling; I wasn’t making any money.’”
“Kevin Barklage of Virginia Beach, spent 18 months working full time as an agent during the sales boom. ‘It was crazy for a while,’ Barklage said. ‘I was working with friends and family mostly. It wasn’t that hard to find people who were buying, regardless of the rising prices. Then, everything started to melt down.’”
“Norfolk resident Sissy Deaton spent four years as a real estate agent before returning in November to work 40 hours a week as a bartender in Ghent. Deaton now works part time as an agent for Prudential Towne Realty. ‘I actually rode the wave a little longer than I should have,’ she said. ‘I probably should have gone back to bartending six months earlier.’”
“Deaton said that as her sales volume began to fall, she was faced with finding a way to make ends meet. ‘There was no choice in the matter,’ she said. ‘I’m not going to lose my house working in real estate.’”
“The Norfolk Redevelopment and Housing Authority…officials said that as the economy has weakened, participation in its first-time home-buyer program has dropped more than 70 percent in the past 18 months - despite offers of down-payment assistance and ultra-low interest rates for low-income buyers.”
“‘People are just not buying homes,’ said John Allen, VP of housing and financial services for Norfolk’s Up Center, which provides home-buyer classes. ‘It’s all because of the economy.’”
“Still others, said Sharon Prescott, the city’s housing development administrator, racked up so much debt during the boom years that they now don’t qualify for loans under stricter lending standards. ‘There’s a lot of interest, but people have such serious credit card debt. They can’t qualify,’ she said. ‘It’s very frustrating. If people would pay down some of that debt we’d have some winners here.’”
The Free Lance Star from Virginia. “Foreclosure and short sales jumped sevenfold in the immediate Fredericksburg area last year, with the Aquia Harbour and Lee’s Parke subdivisions leading the way, a report shows. Neighborhoods that saw the highest volume of sales during the peak of the housing boom have had the hardest time lately, said Rosemary deButts, a senior consultant with Fairfax-based Fulton Research and Consulting.”
“‘Now they can’t get easy money anymore,’ she said.”
The Daily Press from Virginia. “Charlee Gowin, who chairs the Hampton Roads Realtors Association board, said the region is back to levels before the heated real estate market peaked in 2005. ‘We’re calling it back to normal,’ Gowin said during a Virginia Association of Realtors conference call Monday.”
“Some buyers — overwhelmed with the number of available homes — have been slow to put a contract down on a house. Others are coming in with bids 10 to 15 percent below the asking price, hoping to get a deal, said Rick Brandt of RE/MAX Peninsula. ‘While they are trying to get deals, if you get too aggressive, you may not get the property they want,’ he said.”
The Washington Post. “Benjamin McNelley said he loathed the idea of walking away from the mortgage on his four-bedroom, two-bath house in Fauquier County, Va. But when both his father and his stepfather fell ill last summer in South Carolina, McNelley said, he had no choice but to quit his job and move. By then, the new house he had bought for $214,000 in 2003 and then refinanced twice during the boom years was worth far less than his mortgage, which exceeded $400,000. Selling the property proved difficult. He grew anxious.”
“In July, McNelley decided to quit paying his $2,300 monthly mortgage. He said he sent his lender, Countrywide, a letter explaining his situation, that he had moved and quit his job. Countrywide has yet to foreclose on the property, he said, and McNelley is also exploring the option of a short sale. But he sees none of these options as particularly attractive. The home is sitting empty.”
“‘I already have a ‘90 days past due,’ McNelley said. ‘It’s going to be six of one or half a dozen of the other. My credit is shot, so either way you look at it, it is not going to matter much.’”
“‘The prevailing sentiment over the last five to six years has been that a home is primarily an investment and secondarily a place to live,’ said Guy Cecala, publisher of Inside Mortgage Finance in Bethesda, Md. ‘If that is in fact your thinking, it makes it very difficult to make a decision to continue paying your mortgage if you don’t think that investment is going to increase over the next five years.’”
The News Post from Maryland. “The downturn, which began nearly four years ago, has typically pushed home prices down 20 percent from peak values. The price of a home sold in Frederick County in November, the latest figures available from the Maryland Association of Realtors, was $276,594, down 19 percent from November 2007.”
“Steve Maszoros, president of the Maryland Association of Realtors, said predictions of a turnaround in the housing market by mid-year ‘may be a bit of wishful thinking.’”
The Baltimore Sun from Maryland. “Another huge wave of layoffs hit workers yesterday, with major U.S. employers planning to cut almost 60,000 jobs across various industries in the latest sign of distress in the labor market. In Maryland, several private employers notified the state earlier this month of pending layoffs and closures that affect more than 600 workers, starting in March.”
“In Maryland, 296,652 people filed new claims for unemployment benefits last year, up nearly 34 percent from 2007, according to Thomas Wendel, the executive director for the state’s office of unemployment insurance. ‘We’re watching a train wreck in slow motion, and it’s very difficult for us who have to watch, but that’s occurring,’ said Charles W. McMillion, chief economist for MBG Information Services in Washington.”
“Federal banking regulators have told Crofton-based Suburban Federal Savings Bank that it must be sold by Friday or face a possible government takeover. The 53-year-old thrift has been trying to recover from losses on soured real-estate loans. If Suburban were to be seized, it would be the first bank to fail in Maryland since 1992.”
“Bert Ely, a banking consultant in Alexandria, Va., said it will difficult to find a buyer for Suburban. ‘It’s absolutely amazing they’re still open,’ Ely said. ‘The capital at the end of September was almost exhausted.’”
From North Jersey Media Group. “Developers wouldn’t have to pay a fee that generates funds for affordable housing projects for 18 months under economic stimulus legislation cleared Monday by a state Senate panel. Governor Corzine called for a one-year moratorium on the development fee — enacted in July 2008 as part of overhaul of state affordable housing policies — during his State of the State address earlier this month.”
“The bill that passed Monday, sponsored by committee Chairman Ray Lesniak, D-Union, extends the moratorium six months beyond Corzine’s proposal. ‘We are at a tipping point,’ Lesniak said. ‘If we fall over, we are not going to be able to get this economy back up at all.’”
The Star Ledger from New Jersey. “For decades, the massive steel structure dominated the shorefront skyline of Asbury Park. In the spring of 2006, about 80 pounds of plastic explosives finally leveled the 12-story skeleton of a redevelopment scheme that had begun 20 years earlier. The town fathers gathered for the demolition and everyone was optimistic about a new era for Asbury.”
“All the parts seemed to be in place for a town ‘where a new golden era is just beginning’ as the for-sale sign says on the luxury North Beach condo complex. Unlike in the ’80s, hundreds of units actually got built in this boom. Many remain unsold.”
“Timing is everything, they say. In Asbury Park, it’s bad timing. The town has a habit of planning its redevelopment projects so that they get underway just as a housing bubble is about to burst. ‘We thought we were right on target with it, but we missed it by about two years,’ says Deputy Mayor Jimmy Bruno.”
“‘We’re working on a new design,’ said developer Dean Geibel, who is with Metro Homes based in Jersey City. The original design called for 224 ultra-luxury units that would have been sold for as much as $2.5 million to people who would in all likelihood have used them as summer homes. But Geibel said the new plan will produce cheaper units that might be bought by people who want to live in town year-round.”
“Cindy Curto recently moved south from Wayne and opened up a dog-grooming service on Bangs Avenue downtown. She described to me some of the businesses near hers. ‘They have a great paranormal store. They have a great antique store’ she said. ‘But the stores are open weird hours so people don’t know when they’re open.’”
The Erie Times from Pennsylvania. “Two local real estate appraisers could have their professional licenses revoked or suspended by the Pennsylvania Department of State for their appraisals of houses involved in the federal criminal probe of widespread mortgage fraud in Erie.”
“The state claims that between 2003 and 2005, Natalie Rose Hurlburt, of Cambridge Springs, and Kristopher M. Porter, of Edinboro, set values for the houses in question that were as much as $28,000 higher than a state-hired appraiser says those homes were worth at the time.”
“In documents filed with the state’s Board of Certified Real Estate Appraisers, the state claims that in some cases, appraisal reports prepared by Hurlburt and Porter indicate significant, short-term jumps in value for some of the properties. In one case, a property purchased for $15,000 was appraised at $72,000 five months later, the state claims.”
“The properties that were appraised, in nearly each case, were sold to private buyers by local home-redevelopment firms investigated by the FBI as part of the fraud investigation. Those firms include RLD Enterprises, owned by fraud defendant Robert L. Dodsworth; and K&D Enterprises, owned by Dodsworth and Frank Kartesz II, also a defendant in the fraud case. Both Dodsworth and Kartesz pleaded guilty to fraud and conspiracy charges related to their roles in the housing scam, and each is now serving a federal prison sentence.”
“Property appraisals became a central piece of the mortgage-fraud probe because the FBI and other agencies investigated if the sales of nearly 200 properties — nearly all of them within the city of Erie — involved inflated appraisals or other fraudulent information that led buyers to pay more than market value for their homes.”
Crain’s New York. “The Hamptons’ residential market took another beating from a floundering economy in the final quarter of 2008, with prices and sales volumes both dropping significantly from levels in the fourth quarter of 2007, according to a report released Tuesday.”
“‘What you are seeing here is similar to parts of the city,’ said Jonathan Miller, president of Miller Samuel, adding that for the last four years, with the exception of one quarter, there has been a decline in transactions. ‘The drop is attributable to the credit contraction and uncertainty with Wall Street in terms of unemployment and compensation.’”
“The region has long been popular with affluent New Yorkers looking for summer homes near the water. The problem now is that mortgages are even harder to come by than East Hampton parking spaces in mid-July. That is doubly true for people looking to finance their second or third homes, according to Dottie Herman, CEO of Prudential Douglas Elliman.”
“The area south of Route 27, known for its oceanfront properties…held up amid the market turmoil. Median sales price for houses in that area soared 22.4% to $1.1 million. Mr. Miller said the uptick was a result of a lot of high-end sales that were completed during the fourth quarter. Meanwhile, median sales prices for houses north of the highway were down 3.2% to $692,500.”
“‘Oceanfront property is prime,’ said Ms. Herman. ‘There is only so much of it.’”
